Washington does not have a state income tax on wages or salaries
Washington is one of nine states with no income tax on what you earn from a job. You will not owe Washington state income tax on wages, salaries, tips, or most other forms of personal income. If you work in Washington or live there, you do not file a state income tax return to the state.
However, you still owe federal income tax to the IRS. Washington's lack of a state income tax does not change your federal obligations. You will also pay other Washington state taxes — on purchases, property, and certain investments — that replace the revenue a state income tax would bring in.
Key Takeaways
- Washington has no state income tax on wages, salaries, or most personal income, so you will not owe the state anything based on what you earn.
- You still owe federal income tax to the IRS even though Washington has no state income tax.
- Washington funds state services through sales tax (currently 6.5 percent statewide, plus local additions), property tax, and a capital gains tax on certain investment profits.
- If you move to Washington from another state, you do not need to file a final state income tax return with your old state for the year you move, though you may owe taxes to that state for the months you lived there.
- Self-employed people and business owners in Washington still owe federal self-employment tax and federal income tax, even though there is no state income tax.
What taxes Washington collects instead of income tax
Washington makes up the lost income tax revenue through a sales tax that applies to most goods and some services. The statewide base rate is 6.5 percent, but most counties and cities add their own local sales tax on top of that. Depending on where you shop in Washington, the total sales tax can range from 6.5 percent to over 10 percent. This tax is collected at the register when you buy something.
Washington also collects property tax on real estate. If you own a home or land in Washington, you pay annual property tax to your county. The rate varies by county and depends on the assessed value of your property. Renters do not pay property tax directly, but landlords pass some of this cost along through rent.
Since 2022, Washington has also imposed a capital gains tax on the sale of certain long-term investments. If you sell stocks, bonds, or other investments you have held for more than one year and your profit exceeds $250,000, you owe a 7 percent tax on the gains above that threshold. This tax applies only to high-value investment sales, not to most people's retirement accounts or home sales.
How federal income tax still applies to you
Even though Washington has no state income tax, you must still file a federal income tax return with the IRS if your income exceeds the federal threshold. For 2024, that threshold is $14,600 for a single person under 65 and $29,200 for a married couple filing jointly (these amounts change yearly). If you earn more than these amounts, you file Form 1040 with the IRS and pay federal tax based on your income and tax bracket.
The federal tax system is separate from state taxes. Washington's lack of a state income tax does not reduce what you owe the federal government. Your federal tax liability is the same whether you live in Washington, California, or any other state.
Self-employed workers and business owners in Washington
If you are self-employed or own a business in Washington, you do not owe Washington state income tax on your business income. However, you still owe federal self-employment tax (Social Security and Medicare taxes) and federal income tax on your net business profit. Self-employment tax is currently 15.3 percent on 92.35 percent of your net earnings.
You will also owe Washington state business and occupation tax (B&O tax) if your gross income from your business exceeds certain thresholds. This is a tax on gross revenue (not profit) and the rate depends on your business classification. Most service businesses pay 1.5 percent, while retailing and wholesaling pay 0.471 percent. You file B&O tax returns with the Washington Department of Revenue, separate from any federal business tax forms.
Moving to or from Washington
If you move to Washington during the year from another state that has income tax, you do not owe that state income tax for the full year. You only owe income tax to your previous state for the months you lived there. You will file a part-year resident return with that state showing only the income you earned while living there.
When you move away from Washington to another state, you do not file a final Washington state income tax return because Washington does not have income tax. However, you may owe income tax to your new state starting the day you move there. Some states consider you a resident when ready upon moving; others use a 183-day rule or other tests. Check with your new state's tax agency to learn when you become liable for their income tax.
Retirement income and pensions in Washington
Because Washington has no state income tax, you do not owe Washington state tax on retirement income, pensions, Social Security, or distributions from retirement accounts like IRAs or 401(k)s. This is one advantage of living in Washington if you are retired — your retirement income is not taxed by the state.
You still owe federal income tax on most retirement income. Social Security benefits are not taxed federally if your combined income is below certain thresholds, but pension and IRA distributions are generally taxable. The lack of state income tax in Washington straightforward means you avoid the state portion of that tax.
Frequently Asked Questions
Do I have to file a Washington state income tax return?
No. Washington has no state income tax, so there is no state income tax return to file. You only file a federal return with the IRS if your income exceeds the federal threshold. You may need to file other Washington forms if you owe B&O tax or capital gains tax, but not an income tax return.
Why does Washington have no income tax?
Washington voters have consistently rejected income tax proposals. The state funds services through sales tax, property tax, and other sources instead. This choice means Washington residents pay higher sales tax than many other states to make up the difference.
If I work in Washington but live in another state, do I owe Washington tax?
You do not owe Washington state income tax because Washington has no income tax. However, you may owe income tax to the state where you live. Some states tax residents on all income, regardless of where it is earned. Check your home state's rules.
Does the capital gains tax explore to my home sale?
No. The Washington capital gains tax does not explore to the sale of your primary residence. It applies only to long-term investment sales (stocks, bonds, and similar assets) where your profit exceeds $250,000 in a single year.
Are there any deductions or credits I can claim on Washington taxes?
Since Washington has no income tax, there are no state income tax deductions or credits. You may be able to claim deductions and credits on your federal return, which you file with the IRS. Some Washington-specific taxes like B&O tax have their own rules, but they do not work like federal deductions.